Proposal for a Council Directive on harmonization of the main provisions concerning export credit insurance for transactions with medium- and long-term cover
Date: 1997-06-18
Institutions: European Commission
Subjects: approximation of laws, competition, credit insurance, export credit, export credit insurance

COMMISSION  OF THE EUROPEAN  COMMUNITIES 

Brussels,  18.06.1997 
COM(97) 264 final 

97/0166 (ACC) 

Proposal for a 
COUNCIL  DIRECTIVE 

on harmonization  of the main provisions concerning export credit insurance  for 
transactions with medium- and long-term  cover 

(presented  by the Commission) 

EXPLANATORY  MEMORANDUM 

Credit insurance is an instrument  extensively used by governments to promote  exports. By 
providing  cover  for  their  exporters  against  the  risk  of  default  of  the  foreign  debtor, 
whether  on  commercial  or  political  grounds,  they  encourage  them  to  do  business  in 
markets  presenting  an  element  of  risk  which  enterprises  are  unwilling  or  unable  to  bear 
themselves.  A  great  deal  of  money  is  involved:  Each  year,  Member  States'  credit 
insurance  agencies  cover  some ECU  25-30  billion  worth  of  new  contracts  with  a  credit 
period  in  excess  of  one year.  From  1980  to  1995,  the  cost  to  the  national  budgets  was 
particularly  high  (e.g.  nearly  ECU  5  billion  a  year  between  1988  and  1994  for  the 
Community  as a whole),  because  of claims arising from  political  contingencies  including 
the debt crisis, the Gulf War and the collapse of the former  Soviet  Union. 

Each  Member  State  has  its  own  export  credit  insurance  system,  with  different  guarantee 
conditions, premium  rates and cover  policies.  The result  is that  Community  exporters  are 
not competing for business on a level  playing-field. 

Concerned  about  the  effects  of  government  interference  in  markets  at  the  taxpayer's 
expense,  OECD countries have bound  themselves to disciplines restricting official  support 
with  regard  to  credit  terms.  Negotiations  are  currently  under  way  in  the  OECD  to 
introduce guidelines which  would  result  in convergence  of premium  rates  applying  to  the 
different  systems of export  credit insurance. 

In the  Community  itself it was apparent  from  the outset  that  the Member  States'  systems 
for  granting  aid  for  exports  to  third  countries  needed  to  be  harmonized,  and  indeed  this 
objective  is  explicitly  set  out  in  Articles  112  and  113  of  the  Treaty  establishing  the 
European  Community. 

The Council  set up  a Policy Coordination  Group  for  Credit  Insurance,  Credit  Guarantees 
and  Financial  Credits  in  1960.  Its  brief was  to  frame  proposals  for  harmonizing  Member 
States'  credit insurance arrangements. 

The  Coordination  Group  has  mainly  been  involved  with  issues  of  consultation  and 
cooperation  between  credit  insurers,  and has also been  very  active  in connection  with  the 
various negotiations in the framework  of the OECD. 

On  the  harmonization  front  a technical  committee  was given  a  mandate  in the  late  1960s 
to  draft  common  credit  insurance  policies  for  all  credit  insurers  in  the  Community,  and 
such  terms  were  indeed  enacted  in  a  Council  Directive  adopted  on  27 October  1970, 
which,  however,  remained  a  dead  letter.  None  of  the  initiatives  mooted  since  then, 
including the establishment  of a European  credit  insurance  system  and,  more recently,  the 
creation of a credit insurance pool for Eastern Europe, has borne fruit.  • 

Similarly,  on  13 July  1994 the Commission  adopted  a proposal  for  a Directive  based  to  a 
large extent  on two  reports  submitted  to the Council  by an  expert  working  party  charged 
with  looking  at  ways  of  harmonizing  medium-  and  long-term  export  credit  insurance. 
Once again,  however,  the Council  declined to approve the proposal,  objecting  both  to  the 
procedural  aspects  and  its  lack  of  flexibility,  particularly  in  the  approach  to  competition 
from  outside the EC. 

It is plain from  the experience of the last 37 years that Member  States have been  reluctant 
to  cede  their  freedom  of  manoeuvre  on  officially  supported  export  credits,  partly  on 
political  grounds,  since they regard  export  policy  to  some  extent  as a foreign  policy  tool, 
and partly for financial  reasons, since the cost of claims to the public purse is considerable. 

This latest  Commission  proposal  constitutes  a first  step  in the  direction  of  harmonization 
of export  credit  insurance  systems,  and  also  aims to  introduce  a measure  of  transparency 
in this field. 

While it lays down certain common principles applicable to the main constituents of cover, 
however,  it allows for  considerable flexibility  in the way they are applied.  Derogations  are 
allowed on condition that  any alteration in the quality of cover is reflected  in the premium 
charged,  and notified  to the Commission and the other credit insurers. 

The  common  principles  on  premium  represent  a  framework  designed  to  bring  greater 
transparency  to  current  practice  and  allow  for  incorporation  of  whatever  guidelines 
emerge  from  the  ongoing  OECD  negotiations.  The  proposal  does  not  prejudge  the 
outcome of these negotiations, which cover the following  areas: 

country risk model and country classification  procedure; 
premium benchmarks and premium feedback  tool; 
related  conditions; 
permitted  exceptions; and 
special attention for the specific  position of small export  credit agencies. 

The Directive can stand alone, but is designed to be complemented  by future  OECD rules. 
However,  it  should  not  need  textual  amendment  in  the  light  of  any  foreseeable 
OECD  agreement. 

The common principles  on  cover  policy  establish  a format  necessary  for  the  exchange  of 
information  between  credit  insurers,  supplemented  by  the  figures  of  each  year's  results. 
This  information  is  to  a  large  extent  already  provided  to  national  authorities  and 
international  organisations; over  and above that, the use of electronic mail will ensure that 
ihe additional administrative burden is relatively small. 

Decision-making  is by  standard  committee  procedure  which  will  be  used  only  in  certain 
exceptional  circumstances,  principally  in case of dispute over the  status  of the debtor,  and 
should  in  practice  be  infrequent.  Recourse  to  an  already  existing  committee  does  not 
appear  appropriate,  since  there  are  no  existing  committees  which  correspond  to  the 
requirements  of  export  credit  insurance.  The  committee  arrangements  are  therefore 
iti Jikely to affect  credit insurers'  routine business. 

To  sum up, this  draft  Directive  is  a first  step  towards  fulfilment  of the  duty  laid  on  us by 
the  Treaty,  while  allowing  a  degree  of  flexibility  reflecting  the  wishes  of  both  credit 
insurers and business circles. 

Proposal for a 
COUNCIL  DIRECTIVE 
on harmonization of the main provisions concerning export  credit insurance  for 
transactions with medium- and long-term  cover 

THE COUNCIL  OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Article  113 thereof, 

Having regard  to the proposal from  the Commission1, 

Having regard to the opinion of the European  Parliament2, 

1. 

2. 

3. 

4. 

5. 

6. 

Whereas  medium-  and  long-term  export  credit  insurance  plays  a  crucial  role  in 
international trade and constitutes a major  commercial policy  instrument; 

Whereas medium- and long-term export credit insurance plays an important  part in 
trade  with  developing  countries  and  thus  fosters  their  integration  into  the  world 
economy, which is an objective  of Community development  policy; 

Whereas  the differences  between  the official  medium-  and  long-term  export  credit 
insurance  systems  currently  operating  in  the  Member  States  with  regard  to  the 
main constituents  of cover,  premiums and cover policy may result  in distortions  of 
competition  among enterprises in the Community; 

Whereas,  in view  of the third  paragraph  of Artcle  3b of the  Treaty,  the  measures 
provided  for  in this Directive  should  not  go  beyond  what  is  necessary  to  achieve 
the  objective  of the harmonization  ncessary  to  ensure  that  export  policy  is based 
on uniform  principles  and  that  competition between  enterprises  in the  Community 
is not  distorted; 

Whereas  in  order  to  lessen  existing  distortions  of  competition,  it  is  desirable  that 
the  different  official  export  credit  insurance  systems  be harmonized,  as  envisaged 
in  Article  112 of the  Treaty,  on the basis of uniform  principles  and  in  such  a way 
as to form  an integral  part  of the common commercial policy; 

Whereas  the  provision  by  governments  (or  special  institutions  controlled  by 
governments)  of  export  credit  guarantee  or  insurance  programmes  at  premium 
rates which are inadequate to cover the long-term operating costs and losses of the 
programmes  are  classified  as  prohibited  export  subsidies  in  the  Agreement  on 
Subsidies  and  Countervailing  Measures  concluded  in  the  framework  of  the 
Uruguay  Round  multilateral  negotiations  (1986-1994)3  (see  Article  3.1(a)  and 
paragraph (j) of Annex I thereto); 

î 

2 
3  OJ No L 336. 23.12.1994. p.  156. 

7. 

8. 

9. 

Whereas  the  premium  charged  by  credit  insurers  should  correspond  to  the 
risk insured; 

Whereas harmonization  would foster  cooperation  among the credit  insurers acting 
on  behalf  of  the  State  or  with  State  support,  and  enhance  cooperation  among 
enterprises in the Community as envisaged by Article  130 of the Treaty; 

Whereas  both  harmonization  and  cooperation  are  major  and  crucial  factors  in the 
competitiveness of Community exports on non-Community markets; 

10.  Whereas the Commission White Paper  on completing the internal  market  adopted 
by the European  Council  in June  1985  stresses the  importance  of  an  environment 
conducive to cooperation among enterprises in the Community; 

11.  Whereas,  by  a  Decision4  dated  27  September  1960,  the  Council  set  up  a 
Insurance,  Credit  Guarantees  and 

Policy  Coordination  Group  for  Credit 
Financial Credits; 

12.  Whereas  on  15 May  1991  the  said  Policy  Coordination  Group  mandated  experts 
from  each  of  the  Member  States  at  that  time  who,  as  the  Single  Market  1992 
Experts'  Group, 
reports  containing  a  set  of  proposals  on 
27 March  1992,  11 June  1993, and 9 February  1994; 

submitted 

13.  Whereas Council Directive  70/509/EEC5 of 27 October  1970 on the adoption  of a 
common  credit  insurance  policy  for  medium-  and  long-term  transactions  with 
public  buyers,  as  last  amended  by  the  Act  of  Accession  of  Austria,  Finland  and 
Sweden  and  Council Directive  70/510/EEC6  of 27 October  1970 on the  adoption 
of a common  credit  insurance  policy for  medium- and long-term  transactions  with 
private  buyers,  as  last  amended  by the  Act  of  Accession  of  Austria,  Finland  and 
Sweden,  should be replaced by this Directive; 

14.  Whereas  this  initial  harmonization  of  the  export  credit  insurance  should  be 
considered  as  a  step  towards  convergence  of  the  various  systems  of  the 
Member  States  and  should  be  followed  by  subsequent  steps  in  order  to  eliminate 
any remaining forms of distortion of competition, 

HAS ADOPTED  THIS  DIRECTIVE: 

Article 1 
Scope 

The  Directive  applies  to  cover  for  export  transactions  for  goods  and/or  services 
originating in a.Member  State, as far  as it is provided  directly or indirectly for  the  account 
of  or  with  the  support  of  one  or  more  Member  States,  involving  a  repayment  period  of 
two  years  or  more,  or  a  manufacturing  period  and  a  repayment  period  of  two  years  or 
more in total. 

OJ No 66. 27.10.1960. p.  1339/60. 
OJ  NoL'254.  23.11.1970. p.  1. 
OJNOL254.  23.11.1970. p. 26. 

The  Directive  does  not  apply  to  cover  for  advance  payment,  performance  and  retention 
bonds.  Neither  does  it  apply  to  cover  for  risks  relating  to  construction  equipment  and 
material when locally used for the performance  of the commercial  contract. 

Article 2 
Obligations of the Member States 

Member  States  shall  ensure  that  institutions  providing  cover  in the form  of  export  credit 
insurance  or  guarantees  for  the  account  of  or  with  the  support  of  the  State,  hereinafter 
referred  to  as  "insurers",  insure  export  transactions  covered  by  this  Directive  in 
accordance  with  the  provisions  set  out  in the Annex,  when  destined  to  countries  outside 
the Community and financed by buyer credit or supplier credit or paid on cash terms. 

Article 3 
Committee 

The Commission  shall be assisted  by a committee  composed  of the representatives  of the 
Member  States and chaired by the representative of the Commission. 

The  representative  of  the  Commission  shall  submit  to  the  Committee  a  draft  of  the 
measures to  be taken.  The  Committee  shall  deliver  its  opinion  on the  draft  within  a time 
limit  which  the  chairman  may  lay  down  according  to  the  urgency  of  the  matter.  The 
opinion  shall be delivered  by the majority  laid down in Article  148(2) of the Treaty  in the 
case  of  decisions  which  the  Council  is  required  to  adopt  on  a  proposal  from  the 
Commission.  The votes of the representatives  of the Member  States within the  Committee 
shall be weighted in the manner set out in that Article. The chairman shall not vote. 

The  Commission  shall  adopt  measures  which  shall  apply  immediately.  However,  if  these 
measures  are  not  in  accordance  with  the  opinion  of  the  Committee,  they  shall  be 
communicated  by the Commission to the Council  forthwith. 

In that  event, the Commission may defer  application  of the measures which it has  decided 
for  a period of not more than one month from the date of such communication. 

The  Council,  acting  by a qualified  majority,  may take  a different  decision  within  the  time 
limit referred  to in the previous paragraph. 

Article 4 
Application  of the Committee  procedure 

Decisions  referred  to  in  points  47,  50  and  51  of the  Annex  shall  be  taken  in  accordance 
with the procedure laid down in Article 3. 

Article 5 
Report and review 

The Commission  shall submit  a report  on the experience gained  in applying the  provisions 
laid  down  in  this  Directive  to  the  European  Parliament  and  to  the  Council  by 
31 December 2000. 

The  Commission  shall,  where  necessary,  with  a  view  to  fiirther  convergence  of 
the national  export  credit  insurance  systems  and  elimination  of  remaining  distortions 
of competition  between  Community  policy holders, propose amendments to this Directive. 

Article 6 
Relationship to other  procedures 

The  procedures 
Council Decision 73/3 91/EEC7. 

laid  down  by 

this  Directive  supplement 

those  established  by 

Article 7 
Repeal 

Directive 70/509/EEC and Directive 70/510/EEC are hereby repealed. 

Article 8 
Transposition 

Member  States  shall  bring  into  force  the  laws,  regulations  and  administrative  provisions 
necessary  to  comply  with  this  Directive  by  30  September  1998.  They  shall  immediately 
inform the Commission thereof. 

When  Member  States  adopt  these  provisions,  these  shall  contain  a  reference  to  this 
Directive  or  shall  be  accompanied  by  such  reference  at  the  time  of  their  official 
publication.  The procedure for  such reference  shall be adopted by Member States. 

Article 9 
Entry into force 

This Directive  shall enter  into force  on the twentieth  day following  that  of its  publication 
in the OffwialJoumal  of the European  Communities. 

Article 10 
Addressees 

This Directive is addressed to the Member States. 

Done at Brussels, 

For the Council 
The President 

OJNoL346.  17.12.1973. p. 1. 

ANNEX 

Common  Principles for Export Credit  Insurance 

Chapter I:  Constituents  of cover 

Section  1:  General  principles  and  definitions 

1.  Scope of the common  principles 

(a)  The common  principles  laid  down  in this annex  shall apply to cover  for  supplier  credit 
transactions  with  public  or  private  buyers  and  to  cover  for  buyer  credit  transactions 
with public or private borrowers. 

(b)  The  common  principles  shall  apply  to  cover  for  all  risks  as  defined  in  point  4. 
Nevertheless,  the  insurer  mav  decide  in  each  individual  case  to  limit  its  cover  to 
certain risks only. 

(c)  When all the obligations of a private debtor are wholly and unconditionally  guaranteed 

by a public entity, the common  principles for  public debtors shall apply. 

When  used  in  this  Ajinex,  the  term  "debtor  means"  either  the  buyer  or  borrower 
as referred  to  in point  1(a), or their guarantor with regard to the insured  transaction. 

2.  Characteristics  of supplier  credit 

(a)  The term  supplier  credit  shall  apply to  a commercial  contract  providing  for  an  export 
of goods and/or services originating in a Member  State between  one or more  suppliers 
and  one  or  more  buyers,  whereby  the  buyer(s)  undertake  to  pay  the  supplier(s)  on 
cash terms or on credit terms. 

(b)  Cover  provisions  for  supplier  credit  shall  apply  where  cover  is  given  to  enterprises 

established  in a Member  State  in accordance with Article 58 of the EC Treaty. 

(c)  If  a  commercial  contract  is  being  financed  by  means  of  a  buyer  credit  or  any  other 
financing  arrangement,  cover  given  to  the  exporter  for  the  commercial  contract  itself 
shall follow  the provisions for  cover for  supplier credits. 

3.  Characteristics  of buyer credit 

(a)  The term  buyer  credit  shall  apply  to  a loan  agreement  between  one  or  more  financial 
institutions  and  one or  more  borrowers  financing  a commercial  contract  providing  for 
an  export  of  goods  and/or  services  originating  in  a  Member  State,  whereby  the 
lending institution(s)  undertake to  pay the supplier(s)  under  the underlying  transaction 
on  cash  terms  on  behalf  of  the  buyer(s)/borrower(s),  while  the  buyer(s)/borro\ver(s) 
will reimburse the lending institution(s) on credit terms. 

(b)  Cover  provisions  for  buyer  credit  shall  apply  where  cover  is  given  to  financial 
institutions,  irrespective  of  their  place  of  establishment  or  registration,  provided  that 
the  buyer  credit  constitutes  an  unconditional  obligation  of  the  borrower  to  repay  its 
debt, irrespective of the performance  of the commercial contract to be  financed. 

(c)  Cover provisions for buyer credit  shall apply to  any financial  arrangement  financing  a 
commercial  contract,  which  involves  negotiable  instruments  payable  by  a  buyer  and 
held prop  rly bv  a financial institution. 

4.  Definition  of the risks involved 

(a)  The commercial risk for private debtors is determined  by points  14,  15 and  16. 

(b)  The political  risk for  private debtors is determined  by points  17 to  22,  and  for  public 

debtors by points  15 to 22. 

(c)  The manufacturing risk is determined by point 6(b). 

(d)  The credit risk is determined  by point 6(c). 

5.  Definition  of the public and private status of the debtor 

(a)  Public  debtor  is  defined  as  an  entity  which,  in  whatever  form,  represents  the 
public authority  itself  and  which  cannot,  either  judicially  or  administratively,  be 
declared  insolvent. 

Any  debtor  which  is not  public,  according  to  the  aforementioned  definition,  shall  be 
considered  as private. 

(b)  When assessing the status of a debtor, the insurer shall determine: 

- 

the legal status of the debtor; 

- 

the real effectiveness  of any legal action against the debtor; 

- 

the debtor's sources of finance  and revenue; 

- 

the degree of influence  or control  over the debtor that  can be exercised  by the  host 
country  government. 

(c)  In case  of  doubts  about  the  status  of the  debtor,  the  insurer  shall take  account  of the 

fact  that: 

-  a public  debtor  may  either  be  a sovereign  state  or  a  central  government  entity,  or 
any  other  public  entity  which  is  subordinate  to  the  central  government,  such  as 
regional, municipal or parastatal  authorities or other public institutions; 

- 

the  acts  of  a  public  debtor  may  commit  the  central  government  or  the  State; 
payment  obligations  under  the  commercial  contract  or  the buyer  credit  agreement 
will  thus  either  be  met  from  national  budget  funds  or  guaranteed  by  the  State, 
for  example, acting through the Ministry of Finance or the Central Bank; 

-  a public debtor may also discharge his debts by using sources which  are not  related 
to  central  government  funds,  for  example,  through  revenues  raised  by  local 
taxation,  or by providing public services. 

Section 2: 

Scope of cover 

6.  Covered  risk 

(a)  The covered risks shall be the manufacturing  and the credit risk. 

(b)  The  manufacturing  risk  materialises  when  the  performance  of  the  contractual 
obligations  of the  policy  holder,  or  the  manufacture  of  the  goods  ordered,  has  been 
suspended  for  a  period  of  six  consecutive  months,  provided  that  such  suspension  is 
caused  directly  and  exclusively  by  the  occurrence  of  one  or  more  of  the  covered 
causes of loss listed in points  14 to 22. 

(c)  The credit risk materializes when the policy holder  has been unable to  obtain payment 
of all or part  of its claim during a period  of three months after  the due date,  provided 
that  such non-payment  is caused  directly  and  exclusively by the  occurrence  of one  or 
more of the covered  causes of loss listed in points  14 to 22. 

(d)  The  risk  relating  to  a buyer  credit  may  be  covered  conditionally  or  unconditionally. 
The  insurer  shall  follow  the  principles  and  procedures  laid  down  in  points  32,  33, 
and 48(a). 

7.  Extent of cover 

(a)  Cover for manufacturing  risk shall include, within the limit of the contract  amount,  the 
costs  incurred  by the  policy  holder  either  in performing  its  contractual  obligations  or 
in  manufacturing  the  goods  subject  to  the  contract,  provided  that  such  costs  are 
properly attributable to the performance  of the contract. 

Cover for the manufacturing  risk shall not include: 

-  costs  incurred  in  respect  of  goods  for  which  cover  of  the  credit  risk  has  already 

taken  effect; 

- 

the credit insurance premiums paid by the policy holder to the insurer, 

-  amounts  paid  by  the  policy  holder  following  the  calling  of  a  performance  bond 
issued  in  respect  of  the  covered  contract;  however,  this  does  not  prevent  the 
insurer from covering such risks outside the scope of this Directive; and 

-  amounts corresponding to penalties and damages paid by the policy holder. 

(b)  Cover  for  credit  risk  shall  include  the  amount  (principal  and  interest)  owed  by  the 
buyer  under  the  commercial  contract  or  by  the  borrower  under  the  buyer  credit 
agreement,  including interest  as far  as it accrues between  the  due  date  and  the  end  oi^ 
the claim waiting period (post-maturity interest). 

In  case  of a buyer  credit,  cover  for  credit risk shall  include the  standard  banking  fees 
due after  the coming into force  of the buyer credit  agreement. 

In case of a supplier  credit,  cover  for  credit  risk  shall exclude amounts  corresponding 
to penalties and  damages paid  by the policy holder. 

8.  Percentage of cover 

(a)  The percentage of cover shall be 95%. 

(b)  If an insurer  gives  a higher  cover  percentage  than  set  out  in (a)  above,  it  shall  follow 

the principles and procedures laid down in points 32, 33, and 48(a). 

(c)  The  percentage  of  cover  and  the  maximum  amount  of  the  indemnity  for  which  the 
insurer may be  liable shall be  expressly laid  down  in the credit  insurance policy  issued 
by the insurer. 

9.  Uninsured  percentage 

The  policy  holder  shall  retain  for  its  own  account  a  portion  of  the  uninsured 
percentage  equivalent  to  2%  of the insured  amount.  The insurer  may  decide to  allow 
the policy holder to lay off this remaining uninsured  percentage. 

10.  Cover for transactions  in foreign  currency 

If transactions  provide  for  payment  or  financing  in  one  or  more  foreign  currencies, 
cover may be given in any currency. 

11.  Foreign  supplies 

Subcontracts  with parties  in one or more Member  States are automatically  included  in 
the cover in accordance with  Council  Decision  82/854/EEC  on the rules applicable,  in 
the  field  of  export  guarantees  and  finance  for  export,  to  certain  subcontracts  with 
parties in other Member  States or in non-member countries8. 

12.  Effective  date  of cover 

(a)  In case of a buyer  credit,  cover  shall take effect  on the  date  of entry  into  force  of  the 
loan  agreement,  provided  that  the  conditions  precedent  stipulated  in  the  credit 
insurance policy and the buyer credit agreement have been met. 

(b)  In case  of  a  supplier  credit,  cover  of  the  manufacturing  risk  shall  take  effect  on  the 
date  of  entry  into  force  of  the  commercial  contract,  provided  that  the  conditions 
precedent  stipulated  in  the  credit  insurance  policy  and  the  commercial  contract  have 
been met. 

Cover  of  the  credit  risk  shall  take  effect  on the  date  on  which  full  completion  of  the 
contractual  obligations  of  the  policy  holder  entitles  the  latter  to  payment,  provided 
that  the  conditions  precedent  stipulated  in  the  credit  insurance  policy  and  the 
commercial  contract  have been  met. However,  cover of the credit  risk may take  effect 
on the date of each partial  delivery or partial dispatch,  provided  that  the policy  holder, 
under the terms of the contract,  is entitled  to payment  of a fixed  and  definitive  amount 
corresponding  to the value of the goods delivered  or dispatched. 

OJ  No L  357.  1S.I2.I9S2.  p.  20. 

Section 3: 

Causes of loss and exclusions of liability 

13.  Liability of the insurer 

The insurer  shall be liable if the  loss  is directly  and  exclusively  attributable  to  one  or 
more of the covered causes of loss laid down in points  14 to 22. 

14.  Insolvency 

Insolvency of the private debtor and, if any, its guarantor,  either de jure  or de facto. 

15.  Default 

Default  of the debtor and, if any, its guarantor. 

16.  Arbitrary  repudiation  or refusal 

Decision  of  the  buyer  under  a  supplier  credit  to  interrupt  or  cancel  the  commercial 
contract,  or  to  refuse  to  accept  the  goods  and/or  services,  without  being  legally 
entitled to do so. 

17.  Decision of a third  country 

Any measure or decision of the government  of a country other than the country of the 
insurer,  including  measures  and  decisions  of  public  authorities  which  are  deemed  to 
constitute  government  interventions,  which  prevents  performance  of  the  buyer  credit 
agreement  or the commercial contract,  respectively. 

18.  Moratorium 

General moratorium  decreed  either by the government  of the country  of the debtor,  or 
by  that  of  a  third  country  through  which  payment  in  respect  of  the  buyer  credit 
agreement  or the commercial contract must be  effected. 

19.  Prevention or delay in the transfer of funds 

Political  events,  economic  difficulties,  or  legislative  or  administrative  measures  which 
occur  or are taken  outside the  country  of the  insurer,  and  which  prevent  or  delay the 
transfer  of  funds  paid  in  respect  of  the  buyer  credit  agreement  or  the  commercial 
contract,  respectively. 

20.  Legal provisions  in the debtor's  country 

Legal provisions adopted in the country of the debtor  declaring payments made by the 
debtor to be valid discharge of the debt, although  such payments, when converted  into 
the  currency  of  the  commercial  contract  or  of  the  buyer  credit  agreement, 
respectively,  no longer cover the amount  of the debt  at the date of transfer  as a result 
of fluctuations  in exchange rates. 

12 

21.  Decision  of the insurer's  country 

the  country  of 

In the case of a supplier credit agreement,  any measure or decision  of the government 
of 
the 
European Community,  relating to trade between  a Member  State  and third  countries, 
such  as  a  ban  on  exports,  in  so  far  as  its  effects  are  not  covered  otherwise  by  the 
government  concerned. 

including  measures  and  decisions  of 

insurer, 

the 

22.  Force  majeure 

Cases  of  force  majeure  occurring  outside  the  country  of  the  insurer,  for  example 
flood, 
war including  civil  war, 
earthquake, volcanic  eruption,  tidal wave, nuclear  accident,  in so far  as its effects  are 
not insured  otherwise. 

riot,  civil  disturbance,  cyclone, 

revolution, 

23.  General exclusion  from  liability 

The  insurer  shall  have  no  liability  if  the  loss  is  directly  or  indirectly  attributable  to 
the following: 

(a)  any  action  or  omission  by  the  policy  holder,  or  by  any  person  acting  on  its  behalf, 
which  makes  the  buyer  credit  agreement  or  the  commercial  contract  wholly  or 
partially  unenforceable; 

(b)  any  provision  restricting  the  policy  holder's  rights,  which  is  included  in  the  buyer 
credit  agreement,  the  commercial  contract,  or  any associated  document  including  any 
document relating to the guarantee or security arrangements  involved; 

(c)  any  further  agreement  between  the  policy  holder  and  the  borrower,  or  a  guarantor 
respectively,  after  conclusion  of  the  buyer  credit  agreement  or  the  commercial 
contract,  which prevents or delays the payment of the debt; 

(d)  in the case of a supplier  credit,  any failure  of subcontractors,  co-contractors,  or  other 
suppliers to  perform  their  obligations, provided that  such failure  is not  a  consequence 
of political events as described  in causes of loss listed in points  17 to 22. 

Section 4: 

Provisions  for the indemnification  of claims 

24.  Claim waiting  period 

(a)  The  claim  waiting  period  shall  correspond  to  the  period  of  time  set  for  the  covered 

risk to materialise, as laid down in point 6(b) and (c). 

(b)  No claim waiting period need apply: 

-  when,  in  the  case  of  a  private  debtor,  the  non-payment  is  due  to  the  debtor's 

insolvency,  either de jure  or de facto; 

- 

in case of a bilateral intergovernmental debt restructuring agreement; and 

- 

in case of the insurer giving cover in the form of an unconditional  guarantee. 

13 

25.  Indemnification 

The policy holder  is entitled  to  indemnification  at the end  of the claim waiting  period 
as  defined  in  point  24,  provided  that  the  conditions  precedent  to  the  insurance  have 
been  fulfilled,  the  claim  is  legally valid,  and  the  policy  holder  has managed  the  risk 
with due diligence. 

26.  Secured  obligations 

If  the  debtor's  obligations  to  the  policy  holder  have  been  secured  by  means  of 
a guarantee  or  other  security,  the  policy  holder  must  have  taken  all  necessary 
measures to ensure not  only that the guarantee  or other  security is valid, but  also that 
it is enforceable. 

27.  Calculation  of the claim 

In  calculating  the  payment  of  a  claim,  the  insurer  shall  not  pay  the  policy  holder  an 
amount  exceeding  the  actual  amount  of  its  total  loss,  and/or  exceeding  the  amount 
which the policy holder  was  actually  entitled  to  receive from the borrower  under  the 
buyer credit agreement or from the buyer under the commercial contract,  respectively. 

28.  Payment of the claim 

The claim shall be paid without  delay,  at the latest, however,  within one month of the 
end  of  the  claim waiting  period,  provided  that  the  insurer  has  received  all  necessary 
information,  documents,  and  evidence in order to  establish the validity  of the  claim in 
good time. 

In the  case  of cover  for  manufacturing  risk,  the  claim  shall be paid  within  one  month 
either  of the  end  of the  claim waiting  period,  or  of thé  date  of  receipt  of  an  expert's 
report,  where  relevant,  or  of  the  date  of  agreement  by  the  policy  holder  and  the 
insurer on the amount of the claim, whichever is later. 

29.  Disputes relating to the claim 

If  losses  subject  to  an  application  for  indemnification  by  the  policy  holder  relate  to 
rights which  are  in dispute,  the  insurer  shall  defer  the  payment  of  the  claim  until  the 
dispute  is  settled  in  favour  of  the  policy  holder  by  the  court  or  arbitration  body 
provided for in the buyer credit agreement or the commercial contract,  respectively. 

30.  Bilateral  intergovernmental  debt restructuring  agreement 

(a)  If the  covered  buyer  credit  agreement  or  commercial  contract  is subject  to  a bilateral 
intergovernmental  debt  restructuring  agreement,  the  policy  holder  shall  follow  the 
conditions  of  the  restructuring  agreement  in  respect  of  both  the  insured  and  the 
uninsured  portions  of  that  buyer  credit  agreement  or  commercial  contract, 
respectively.  The  policy  holder  shall  give  any  assistance  to  the  insurer  which  is 
necessary for the performance  of the restructuring  agreement. 

(b)  If  the  insured  amount  is  included  in  a  bilateral  intergovernmental  debt  restructuring 
agreement,  the insurer may waive the one-month period provided for in point 28, once 
the bilateral agreement is  effective. 

14 

31.  Additional  costs 

Additional  costs  resulting  from  action  to  minimise  or  avoid  loss  shall  be  covered 
proportionally  to  the percentage  of cover under  the  credit  insurance  policy,  provided 
that  they  have been  approved  by the  insurer.  Additional  costs  include  costs  of  court 
action and other legal expenses. 

However,  if  such  costs  also  relate  to  amounts  or  maturities  not  covered  by  the 
insurer, they  shall  be attributed  proportionally  to  the  insured  and  uninsured  amounts 
or maturities. 

Chapter H:  Premium 

32.  General principles for setting the premium 

The premium charged for export credit insurance shall: 

-  correspond to the risk covered; 

-  adequately reflect  the scope and the quality of the cover granted; 

-  not be inadequate to cover long-term operating costs and losses. 

33.  Quality of cover 

When determining the quality of cover as mentioned in point  32, the insurer  shall duly 
take into account  the percentage  of cover,  the  degree  of conditionality  of cover,  and 
any other condition affecting  the quality of cover. 

34.  Country risk assessment 

The  level  of  premium  charged  for  each  country  or  each  country  category  shall  be 
based on an appropriate country risk assessment. 

35.  Status of the debtor 

(a)  When  setting  premium  rates,  the  public  or  private  status  of the  debtor  as  set  out  in 
point  5  shall  be  taken  into  account  by  applying  premium  rates  reflecting  the 
creditworthiness of the debtor. 

(b)  In  the  case  of  a  private  debtor,  the  insurer  may  cover  either  the  commercial  or  the 
political  risk  or  both  types  of  risk.  Where  cover  is  limited  to  one  type  of  risk,  the 
premium charged  shall correspond  only to the risk covered. 

36.  Risk period 

(a)  When calculating the premium, the total risk period  shall be taken into account. 

(b)  In the case of manufacturing  risk, the total risk period  shall be the period between the 

effective  date of the commercial contract  and: 

- 

the full  completion of the exporter's contractual  obligations; or 

- 

the  average  weighted  date  of  deliveries  if the  contract  stipulates  partial  deliveries 
and entitles the supplier to corresponding payments. 

15 

(c )  In  the case  of  credit  risk,  the total  risk  period,  weighted  according  to  the  amount  of 

principal and interest actually at risk, shall be: 

- 

- 

the  period  between  the  date  on  which  the  credit  risk  cover  took  effect  for  the 
exporter and the last payment made by the buyer; or 

the  average  risk  period  between  the  first  drawing  as  envisaged  under  the  buyer 
credit  and the date of the final repayment. 

37.  Chargeable  amount 

(a)  Premium  shall be paid  on the chargeable  amount  as defined  below, which  determines 

the maximum liability for the insurer under the credit insurance policy. 

(b)  In the  case  of  buyer  credit,  the  chargeable  amount  shall be  determined  by the  total  of 

the covered  amounts  of: 

- 

the principal of the loan; 

- 

the interest  of the loan, including constructional  interest; 

- 

the standard banking fees; and 

- 

the post-maturity  interest. 

(c)  In the case of supplier credit and cash contracts, the chargeable amount shall be: 

-  for  the  manufacturing  risk  the  total  contract  value  minus  the  downpayment  and 
any  amounts  not  covered;  the  chargeable  amount  may,  if  the  insurer  agrees,  be 
reduced to the expected  maximum loss; 

-  for  the  credit  risk  either  the  total  of principal  and  interest  including  post-maturity 
interest,  or  the  amounts  due  on  or  after  partial  delivery  or  on  or  after  full 
completion  of  the  contractual  obligations,  or  the  amounts  due  upon  separate 
performances  which entitle the supplier to corresponding  payments; the  chargeable 
amount  may, if the insurer agrees, be reduced to the expected maximum loss. 

38.  Payment of premium 

(a)  The  total  premium  amount  shall  be  due  on  the  date  of  issue  of  the  credit 

insurance policy. 

(b)  However,  the premium may be paid in instalments. In this case, the insurer shall: 

-  require  at  least  15%  of the  premium  amount  to  be paid  on the date of issue of the 

credit  insurance policy; 

charge  interest  corresponding  to  an  appropriate  commercial  interest  rate  on  the 
deferred  payments from the date of issue of the credit insurance policy; 

-  require  that  the  premium  received  matches  at  least  the  premium  due  for  the 

amount  at risk at any particular time. 

16 

Chapter III:  Country  cover policy 

39.  Determination  of the country cover policy 

(a)  The  insurer  shall  base  its  country  cover  policy  on  an  assessment  of  the  risk  by 
country,  its  total  outstanding  exposure  for  each  country,  and  the  composition  of  its 
country risk portfolio  in the light of its size and specific  structure. 

(b)  In  setting  its  country  cover  policy,  the  insurer  shall  take  into  account  each  debtor 

country's  classification. 

(c)  Nevertheless, the insurer shall be free to stop or limit insuring business for a particular 

country, regardless of the country  classification. 

40.  Definition  of total outstanding  exposure 

(a)  The total  outstanding  exposure  shall, within the limits of the  percentage  of cover,  be 
determined  on  the  basis  of  the  amounts  for  medium  and  long  term  business,  as 
defined  in Article  1  of the Directive. 

The total outstanding exposure consists of the following  elements set out  below in (b) 
to (e). 

(b)  The maximum  amount  at  risk  in principal  and  interest  for  concluded  contracts  which 
the insurer is committed to cover even if the insurance policy has yet to be issued. 

Covered  post  maturity interest  accruing during the claim waiting period. 

Any amount, reinsured,  if the insurer  is acting  as reinsurer;  if,  however,  the insurer  is 
acting as prime insurer, the reinsured  amount  is excluded. 

(c)  The  amount  of  outstanding  claims  awaiting  recovery  and  not  yet  written  off, 
irrespective  of  whether  such  claims  relate  to  materialization  of  a  manufacturing  risk 
and/or a credit  risk. 

(d)  The  amount  of  non-repatriable  amounts,  such  as  those  relating  to  bonds  and  non-
repossession  risk  cover,  once  a  claim  has  actually  been  paid  and  has  neither  been 
recovered  nor been written  off. 

(e)  Outstanding  interest  and  interest  to  be  paid  by  debtor  countries  under  rescheduling 

arrangements,  including capitalized  interest. 

41.  Country  risk 

(a)  As regards  the  group  of countries  which constitute  the  best  risk,  the  insurer  shall, in 

principle, set no restrictions on its cover policy. 

(b)  For other countries, the insurer may set restrictions on its cover policy. 

(c)  An  insurer  which,  in  principle,  does  not  offer  cover  for  a  country  or  a  particular 
group  of  countries,  may,  however,  exceptionally  cover  certain  transactions  for 
reasons  of  bilateral  policy  or  national  interest,  or  where  sufficient  freely  convertible 
foreign  exchange is available for the transaction  in question. 

17 

42.  Exposure  limits 

(a)  Concerning  the  countries  referred  to  in  point  41(b),  insurers  may  set  risk  ceilings, 
which shall normally represent the highest degree of exposure  an insurer may risk on 
a specific country. 

(b)  At  or above  the  risk  ceiling  for  a particular  country,  the  insurer  may  limit  the  total 
outstanding  exposure  for  the  country  in  question  by  increasing  the  applicable 
premium, or restricting, irt cumulative or alternative manner, for example: 

-  the total outstanding exposure for that country; 

-  the total value of offers  of cover; 

-  the value of new contracts to be covered; 

-  the maximum amount covered per transaction. 

(c)  Below  the  risk  ceiling  for  a particular  country,  there  shall  generally  be  no  limit  on 
cover  policy.  Nevertheless,  the  insurer  may  restrict  the  amount  of  cover  for  the 
country in question by using, for example, the restrictions provided for in (b) above. 

43.  Specific  conditions  for country  cover 

In any case, the insurer may routinely apply to a particular country,  irrespective  of the 
corresponding  country category,  certain cover conditions such as: 

-  payment  and/or  transfer  guarantee  by  the  central  bank  or  the  finance  ministry  of 

the relevant  country; 

- 

irrevocable  letter of credit or bank guarantee; 

-  extension  of the claim waiting period; 

-  reduction  in the cover percentage; 

-  restriction  of  the  cover  for  certain  sectors  of  activity  or  for  certain  types 

of projects. 

Chapter IV:  Notification  procedures 

44.  Scope of the  notification  procedures 

(a)  Each insurer  shall apply the following  procedures  to the common  principles  set  out  in 

Chapters I,  II and III. 

(b)  Tliese 

procedures 

under  Council 
Decision  73/391/EEC on consultation  and information  procedures  in matters  of credit 
insurance,  credit  guarantees  and financial  credits9. 

supplement 

established 

those 

shall 

9  oj  No L :MO. r. li.nn:*. p.  i. 

is 

45.  Types of notification  procedures 

There  shall be four  types of notification  procedures,  destined  to  the  Commission  and 
the other insurers: 

-  annual notification  for  information; 

-  notification  for  decision; 

-  ex-ante notification  for information;  and 

-  ex-post notification  for  information. 

46.  Annual  notification  for  information 

(a)  At  the  end  of  each  year,  at  the  latest  however  by  31  March  of  the  following  year, 
each  insurer  shall report  to  the  other  insurers  and  to  the  Commission  on  its  activity 
over  the  previous  year  on  a  retrospective  basis.  This  report  shall  cover  all  debtor 
countries and  shall contain, for  each of these countries: 

- 

the total amount  of cover the insurer has  offered; 

- 

the total outstanding exposure as defined  in point 40; 

- 

the premium income earned; 

- 

the amount  of present  arrears; 

- 

the amount  of recoveries made; and 

- 

the amount  of claims paid. 

(b)  At the beginning of each year,  at the latest by 31 January,  each insurer  shall report  to 
the other insurers and to the Commission on its cover policy as envisaged for  the year 
to  come.  This  report  shall  cover  all  debtor  countries  and  shall  contain,  for  each  of 
these countries, at least the following  information: 

- 

the total  amount of cover the insurer is willing to  offer; 

- 

the country cover policy; i.e. the type and level of ceilings as well as the conditions 
the insurer intends to routinely impose on cover; 

- 

the way premium will be calculated  and charged for commercial and political risk. 

47.  Notification  for decision 

(a)  In case of competing  offers  from  Community  exporters or banks, an insurer  involved 
shall  respond  without  delay  to  any  request  for  information  from  another  insurer 
involved  on  the  status  of  the  debtor  of  the  transaction  in  question  -  as  defined  in 
point 5. 

(b)  In  case  of  disagreement  on  the  status  of  the  debtor,  the  insurers  involved  shall 
make the  information  available  to  the  other  insurers  in  a bid  to  settle  on  a  mutually 
agreed  status. 

19 

(c)  If insurers  cannot  agree  on the  status of the  debtor  within  10 working  days from  the 
request  for  information,  the insurers involved  shall bring the matter  with  the  relevant 
information  to the attention of the Commission, which shall then initiate a decision to 
be taken in accordance with the procedure laid down in Article 3 of the Directive. 

48.  Ex-ante  notification  for  information 

(a)  An  insurer  which  intends  to  derogate  from  the  provisions  of  this  annex  by  giving 
more  favourable  cover  conditions  either  for  a  particular  transaction  or  a  set  of 
transactions,  or  for  a certain  sector  or  sectors,  or  for  a certain  country  or  countries, 
or  for  its  overall  system,  shall  notify  the  other  insurers  and  the  Commission  of  its 
intention at least seven working days before its decision becomes effective,  stating the 
reasons for the intended  derogation,  e.g. the need to  match international  competition, 
and the corresponding premium rate to be charged. 

(b)  An  insurer  which  intends  to  charge  lower  premium  than  that  set  out  in  its 
annual notification  in accordance  with point  46(b),  shall notify  the  other  insurers and 
the  Commission  of  its  intention  at  least  seven  working  days  before  its  decision 
becomes  effective. 

(c)  An  insurer  which,  following  another  insurer's  notification  in  accordance  with  point 
(a)  or  (b)  above,  intends  to  give  more  favourable  conditions  than  the  initiating 
notifier,  shall  notify  the  other  insurers  and  the  Commission  of  its  intention  at  least 
seven working  days before  its decision becomes effective,  stating the premium rate it 
intends to charge. 

(d)  An insurer  which,  in accordance with  point  41(c),  intends to  cover  transactions  with 
debtors in countries, for  which it normally does not  offer  cover,  shall notify  the other 
insurers  and  the  Commission  of  its  intention  at  least  seven  working  days  before  its 
decision becomes effective,  stating the premium rate it intends to charge. 

49.  Ex-post  notification  for  information 

(a)  An insurer which decides to  derogate from  the provisions  of this annex by giving less 
favourable  cover conditions either for  a particular transaction  or a set of transactions, 
or for  a certain  sector  or  sectors,  or for  a certain  country  or  countries  should  notify 
the other insurers and the Commission accordingly. 

(b)  An insurer  which  decides to  adjust  one or more elements of its country  cover  policy 
set  out  in  its  annual notification  in  accordance  with  point  46(b),  shall  without  delay 
notify  the other insurers and the Commission  accordingly. 

(c)  An insurer which, following  a notification  in accordance with points 48(a),and/or (b), 
decides to give the same conditions as the initiating notifier,  shall without  delay  notify 
the other insurers and the Commission accordingly. 

(d)  Each  insurer  shall  without  delay  give  detailed  replies  to  any  request  from  other 

insurers or the Commission for  clarification  or information  on its activity. 

20 

50.  Use of an electronic mail system 

(a)  All notifications shall normally be made via an electronic mail system, or, if necessary, 

by other appropriate means of instant written communication. 

(b)  The electronic mail system shall be decided upon in accordance with the  procedure 

laid down in Article 3 of the Directive. 

51.  Currency to be used in notifications 

All monetary amounts contained in any notification,  irrespective of the type, shall be 
expressed in ECUs on the basis of the latest exchange rate, unless otherwise decided 
in accordance with the procedure laid down in Article 3 of the Directive. 

21 

FINANCIAL  STATEMENT 

Council  Directive on harmonization  of the main provisions concerning export credit 
insurance for transactions with medium- and long-term  cover 

1 

TITLE OF OPERATION 

Council  Directive  on  harmonization  of  the  main  provisions  concerning  export  credit 
insurance for transactions with medium-and  long-term cover 

2. 

BUDGET HEADING INVOLVED: 

See point  10 - administrative 

expenditure 

3. 

LEGAL  BASIS 

Article  113 of the Treaty on European Union 

Proposal  for  a  Council  Directive  on  harmonization  of  the  main  provisions 
concerning  export  credit  insurance  for  transactions  with  medium-  and  long-term 
cover (COM(97) 264) 

4 

DESCRIPTION  OF OPERATION 

4.1  General  objective 

insurance  is  one  of  the  most  effective 

Credit 
the 
Member  States  to  promote  exports  and  was  one  of  the  most  costly  for 
national budgets  from  1980 to  1995. Each  Member  State  has its own  system, 
with  significant  differences  in guarantee  conditions,  premium  rates  and  cover 
policies.  The  result  is  that  the  playing  field  for  Community  exporters 
competing for business on non-EC markets is not level. 

tools  available  to 

This  was  apparent  to  the  founding  fathers  of  the  Treaty  establishing  the 
European  Economic  Community  with  Articles  112  and  113  calling  for  the 
harmonization  of the systems whereby Member  States grant  aid for  exports  to 
non-EC  countries. 

This  Directive  is the  first  step  towards  the  harmonization  of  credit  insurance 
systems which will reduce  distortions  of competition  for  Community  business 
and introduce some transparency into this area. 

The  proposed  Directive  provides  for  a  notification  system  (Chapter  IV)  and 
decision-making  procedure (Article 4) involving  consultation  of a committee. 

4.2  Period  covered  and arrangements for  renewal 

The measure covers an indefinite  period  as the notification  system to be set up 
under the proposed  Directive will be permanent. 

22 

CLASSIFICATION  OF  EXPENDITURE 

5.1 Compulsory  expenditure 
5.2  Non-differentiated  appropriations 
5.3 Type of revenue: none 

TYPE OF EXPENDITURE  OR REVENUE 

100% subsidy: none 

Subsidy  for joint financing with  other  sources  in the  public  and/or  private  sector: 
none 

Interest  subsidy: none 

Other: none 

Should the operation prove an economic success, is there provision for  all or part 
of the Community contribution to be reimbursed?  : n/a 

Will the proposed  operation cause any change in the level of revenue? If so, what 
sort of change and what type of revenue is involved?  : n/a 

7. 

FINANCIAL  IMPACT 

7.1  Method of calculating  total cost of operation (definition  of unit costs) 

7.2 

Itemized breakdown of cost 

CA (ECU million) 

Year 
1998 

1999 

2000 

2001 

2002 

2003 
and 
sub 
years 

Total 

Breakdown 

• 

Total 

23 

None 

7.3 

Indicative schedule of commitment/payment  appropriations 

CA (ECU million) 

Year 
1998 

1999 

2000 

2001 

2002 

2003 
and 
sub 
years 

Total 

None 

None 

Commitment 
appropriations 

Payment 
appropriations 

Year  1998 
1999 
2000 
2001 
2002 
2003 
and sub years. 

Total 

FRAUD PREVENTION  MEASURES 

Specific  measures planned 

Expenditure (travelling expenses of national  representatives attending  meetings) 
will be reimbursed  only on presentation  of supporting documents. 

ELEMENTS  OF COST-EFFECTIVENESS  ANALYSIS 

9.1 

Specific  and quantifiable  objectives  and target  population 

Specific  objectives: links with general  objective 

The objectives  cannot be quantified  in cost-effectiveness  terms. 

Target  population:  distinguish  as applicable for  each objective;  indicate  the 
end  beneficiaries  of  the  Community  financial  contribution  and 
the 
intermediaries involved 

Exporters, financial  institutions and credit  insurance agencies 

9.2 

Grounds for the operation 

Need for Community financial  aid in the light of the principle of subsidiarity 

Under  Article  113  of  the  Treaty  on  European  Union  the  Community  has 
sole  responsibility  for  commercial  policy  and  the  principle  of  subsidiarity 
does not therefore  apply.  The Commission  will be assisted  by  a  committee 

24 

composed  of  representatives  of  the  Member  States  and  chaired  by  a 
Commission representative. 

Choice of ways and means 

Meeting  of  existing  or  future  committee  provided  for  in  the  proposed 
Directive (Articles 4 and 5) 

Advantages over possible alternatives (comparative  advantages) 

Explanatory reference to similar Community or national  operations 

Spin-off and multiplier effects  expected 

See point 4.1 general objective: harmonization and transparency 

Main  factors  of  uncertainty  which  could  affect  the  specific  results  of  the 
operation 

Member  States' failure to apply the terms of the Directive 

9.3  Monitoring and evaluation of the operation 

Performance  indicators selected 

Output indicators (measuring activities used) 

Impact indicators (measuring performance  against  objectives) 

The Commission will present  a report  on the lessons to  be drawn  from  the 
implementation  of the  provisions  of  the  proposed  Directive  to  Parliament 
and the Council by 31 December 2000 

Assessment  of the results obtained 

Details and frequency  of planned  evaluations 

10 

ADMINISTRATIVE  EXPENDITURE  (PART A  OF  SECTION  III OF  THE 
BUDGET) 

The necessary  administrative  resources will  actually  be mobilized  by means  of  the 
annual  Commission  Decision  to  allocate  the  resources,  having  regard  to  present 
resources and additional resources authorized by the budgetary  authority. 

25 

10.1 

Impact  on the number of posts 

Type of post 

Staff to be assigned  to, 
administration of the 
operation 

Permanent 
posts 

Temporary 
posts 

Officials  or 
temporary  staff 

Other  resources 
Total 

A 

B 
C 

2 

1 

3 

-

2SNE 
2 

of which 

period 

from use of 
existing 
resources 
within the DG, 
service or 
department 
concerned 

2 

1 

2SNE 
5 

from additional 
resources in 
1997 

indefinite 

-

-

-

10.2  Total financial impact of the additional human resources 

Amounts 

Method of calculation 

Officials 
Temporary  staff 
Other resources (state budget 
heading) 

Total  1 

| 

10.3 

Increase in other operating expenditure resulting from  the operation 

Budget  heading 
(No and description) 
A 2510 

Amount 

21 000 

Method of calculation 

Two Member  State(committee) coordination 
meetings a year 
(Total cost of organizing these two Member 
State meetings in Brussels a year, with one 
Member  State representative per meeting) 

Total  ] 

21 000  1 

26 

ISSN 0254-1475 

COM(97) 264  final 

DOCUMENTS 

EN 

11  01  09  10 

Catalogue  number  :  CB-C0-97-321-EN-C 

ISBN  92-78-21784-0 

Office  for  Official  Publications of the European  Communities 

L-2985  Luxembourg